Professional Employer Organizations: What Are They, Who Uses Them and Why Should We Care?

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Last Updated: 11/05/08

About This ArticleVol. 32, No. 4

In this article, the authors review the history and current nature of professional employer organization (PEO) services, and use publicly available data to show that the distribution of the use of PEO services is not uniform across industries or geographical areas.

A growing number of U.S. workers are counted as employees of firms that they do not actually work for. Some of these workers are from temporary help services (THS) agencies and some are leased employees, who are on the payrolls of professional employer organizations (PEOs) but work for PEOs’ client firms. Several studies have looked at firms’ use of THS, but few have examined the use of PEO services. In this article, the authors use data from the U.S. Census Bureau to shed some light on PEOs—how they operate, what types of companies employ them and why.